Indices
Dow - 81.08  I   Nasdaq - 14.67  I  S&P 500 - 8.12 

Market Wrap
(Briefing):

Stocks took a breather Thursday as broad-based consolidation efforts brought the strong start to 2006 to a standstill, closing all ten economic sectors in negative territory. With the Dow, S&P and Nasdaq up an impressive 3.0%, 3.7%, and 5.7%, respectively, over just the first seven days of the year, a lack of industry leadership spurred in part by downbeat analyst commentary, volatile energy prices and earnings uncertainty prompted participants to lock in recent gains.

Materials turned in the day's worst performance, led by continued deterioration in DuPont (DD 40.28 -0.86) following its Q4 profit warning as well as weakness in steel, paper and gold. Consumer Discretionary also lost ground as downgrade-induced losses in homebuilding and education services overshadowed an upgrade on Bed Bath & Beyond (BBBY 37.10 +0.79) and reports that Federated Department Stores (FD 72.98 +1.35) plans to divest its Lord & Taylor division. Providing additional sources of sector weakness were autos and auto equipment stocks, as an earnings warning from Borg Warner (BWA 56.00 -2.30) played into why we've maintained an Underweight rating on the sector since April 2004. General Motors (GM 20.92 -0.94) was the Dow's worst performer, closing lower for a third straight day as initial appreciation for new products at the Detroit auto show continued to wane.

Despite an analyst upgrade that helped Apple Computer (AAPL 84.29 +0.39) hit an intraday historic high, lending support to our Overweight rating on Technology and affinity toward portable electronic devices, widespread consolidation in chip stocks, a day after the PHLX Semi Index hit a 52-week high, weighed heavily on Technology. Another area thought to be overbought over the short term was Energy, as many drillers and explorers hit new historic highs intraday before consolidating into the close as natural gas futures finished down 3.2%. Even though record exports and falling costs of oil imports helped narrow the Nov. trade deficit to a better than expected $64.2 bln, consolidation throughout transportation and diversified machinery, following respective downgrades on Southwest Airlines (LUV 16.36 -0.39) and Eaton Corp (ETN 65.88 -1.67), prevented the Industrials sector from taking notice.

Financial was also an influential leader to the downside, as an analyst downgrade on J.P. Morgan (JPM 39.92 -0.78) overshadowed plummeting bond yields. The 10-yr note closed up 11 ticks to yield 4.40% as the ongoing and potentially escalating conflict with Iran added a source of safe-haven buying support for Treasuries. Health Care also lost ground as continued weakness in biotech and little appreciation for Guidant's (GDT 70.36 -0.08) endorsement of Johnson & Johnson's (JNJ 62.15 -0.35) new $23.2 bln bid closed the sector just below the flat line.

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Trade system guidelines (edited):
Only available to Newsletter Subscribers.

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Today's Picks - January 13, 2006

1.   CAT - CATERPILLAR

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
01-13-06		Long	Above 15 high	Sell 1/2 once risk covered	Below LOD at time of setup
	* Please Note: If the stock gaps down at the open not enter the trade unless it trades above 62.66

2.   FD - FEDERATED DEPT STORES

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
01-13-06		Long	Above 15 high	Sell 1/2 once risk covered	Below LOD at time of setup
	* Please Note: If the stock gaps down at the open not enter the trade unless it trades above 73.25

3.   OS - OREGON STL MLS

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
01-13-06		Long	Above 15 high	Sell 1/2 once risk covered	Below LOD at time of setup
	* Please Note: If the stock gaps down at the open not enter the trade unless it trades above 32.67

Previous Trades

GME - GAMESTOP CORP

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
		Long	Above 15 high	Sell 1/2 once risk covered	Below LOD at time of setup
	* did not setup

UPL - ULTRA PETROLEUM

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
01-12-06	01-12-06	Long	62.31	Reached (63.14)	Closed Below 62.31	up to + $1.59 per share (63.90)

AQNT - AQUANTIVE

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
		Long	Above 15 high	Sell 1/2 once risk covered	Below LOD at time of setup
	* did not setup

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EOD = End of day.
LOD = Low of day.
PDC = Previous Day's Close.
S/R = Support/Resistance.
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